I quite often talk to companies that tell me that they have no competition. In my mind this statement doesn’t make a darn bit of sense. After a longer conversation we usually end up talking about the competition in a more realistic way. My conclusion is that having “no competition” is either a very good thing or a very bad thing depending on how much you have studied your competition, how honest you have been about your capabilities and those of your competitors and how compelling your value proposition really is. Here’s what I’ve learned.
What it really means when you say you have “no competition”:
1. No competitive analysis has been done – Ignorance is bliss and as long as you don’t happen to run into a competitor then you can safely assume there isn’t any – right? Right? In fairness I have only seen a couple of very, very early stage companies that have had no knowledge of the competitive landscape at all.
2. There are competitors but they “don’t count” –This one is more common for startups in emerging markets where the competitors are other startups or small initiatives inside larger companies. The argument usually goes like this – “But competitor X only has 3 customers” or “Microsoft has a competing product but it sucks.” Yeah well, you don’t have many customers either and the last time I checked Microsoft has an amazing ability to sell stuff even if it happens to be a little sucky.
3. You have defined a segment where your solution clearly wins – Some companies have done their homework, understand and take the competition seriously, and have defined a segment with an urgent unmet need where they can clearly differentiate themselves and therefore, within that segment, there is in essence, no serious competition. If this is you, congratulations, you rock.
4. Your real competition is ‘Do Nothing’ – If this is the case then you are most likely in very big trouble my friend. If doing nothing is more compelling than buying and deploying your solution, then there is no market for what you do. In presentations to VC’s that I’ve done, they often ask the question “what is the compelling reason to buy?” This is another way of saying “Your prospects have been doing fine so far without doing anything. Why would they buy your stuff when they could keep doing nothing for free?”
The trick in all of this of course is to make sure you are truly case #3 and not actually case #1, #2, or #4 pretending to be a #3.
The first step is to look in the mirror and say this “I have competitors, and doing nothing is one of them.” Then take it from there.